The Player: Roy Gardner, Chief Executive of Centrica - Gasman turns up the heat for customers
Wednesday 30 June 1999
CHALLENGE: "To continue to enhance the excellence of our service delivery," says Mr Gardner. British Gas was split in two in February 1997 with Centrica as its production and sales arm and BG, a gas storage and transportation business. Centrica's business mix of upstream gas production and customers, with no pipeline assets between, is almost unique among utilities. Centrica has changed from a gas monopoly supplier to be a provider of a range of products and home services in a competitive market. Mr Gardner wants to build on the British Gas and Goldfish brands.
CORPORATE BACKGROUND: Mr Gardner has been chief executive of Centrica since the demerger of the Supply, Services and Retail businesses from British Gas in February 1997. He joined British Gas as finance director in 1994, and in 1995 took executive responsibility for all trading businesses in British Gas.
He had been managing director of GEC Marconi. Other employers include Northern Telecom Europe, STC and the British Aircraft Corporation. Since 1996, Mr Gardner has been a non-executive director of Laporte.
STRATEGY: "To become the supplier of choice for energy and services for consumers in Britain," says Mr Gardner. Centrica has retained 78 per cent share of the now fully competitive UK domestic gas supply market. "Our brand is extremely strong," says Mr Gardner, noting the high number of domestic gas consumers who have chosen to stay with British Gas though they have a choice of suppliers. In the industrial and commercial sector, Centrica has retained a quarter of the market.
As Centrica, the company is enjoying improved customer relations. In the mid-1990s, British Gas faced a barrage of consumer criticism, earning its place in history as the birthplace of the "Fat Cat" company director. The company has been transformed. Independent customer satisfaction measures show Centrica is "amongst the best in its class", claims Mr Gardner.
The electricity market was opened to competition last August and Centrica has won 1.5 million customers and acquiring 30,000 new ones every week. Mr Gardner says Centrica intends "to retain a large share of the dual fuel market". He envisages just four or five major integrated energy players in the UK market. Centrica is one of the largest gas producers in Morecambe Bay and last year acquired PowerGen North Sea Limited as an additional source of gas. Mr Gardner says although Centrica wantsto invest in power generation it has no intention of buying an electricity supply business, because customer numbers can be grown organically. The acquisition of generation assets would be a significant strategic step forward. Centrica has been mooted as a consortium bidder for Drax, Britain's biggest power station.
Mr Gardner says the group needs to extend the range of products and services it provides for consumers. It already offers electrical and plumbing services and air-conditioning. He believes there is scope to add further services which utilise Centrica's expertise in large-scale customer service. With this strategy, Centrica is this week in talks about its planned pounds 1.1bn purchase of the Automobile Association. Centrica's Services division and the AA have similarities. Both have call centres, teams of engineers who travel to provide direct customer support, and they also sell insurance policies.
Centrica has made a successful debut in the financial services arena with its Goldfish credit card which has 900,000 members. "We intend to build on this," says Mr Gardner who expects to see further banking and insurance products launched under the brand.
Last year, British Gas Services made a profit for the first time, pounds 9m compared to a loss of pounds 49m in 1997.
MANAGEMENT STYLE: Mr Gardner says he is a very strong believer in "the team approach". "I like people to understand how they are going to contribute to the common goal." Mr Gardner says he likes to encourage innovation and maintain total focus on meeting customer needs.
MOST ADMIRES IN BUSINESS: Tesco and Lord MacLaurin of Knebworth, former chief executive of Tesco, because of the group's trans- formation into the UK's premier supermarket. "I think they have done a tremendous job," he says.
CITY VERDICT: Mr Gardner says the City is starting to understand Centrica is not just "a plain old utility". Since demerging, its stockmarket valuation has doubled to pounds 5.5bn. Oil and gas analysts at ABN Amro upgraded their earnings forecasts for 1999 by 10 per cent to pounds 286m.City analysts see scope for the Centrica share price to rise to 160p. This does not include potential growth from a hopefully successful move into home and car insurance.
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